) is set to report its first-quarter fiscal 2013 results on May 2
before the market opens. Last quarter it posted 3.1% positive
surprise. Let's see how things are shaping up for this
Factors to Consider This Quarter
During the first quarter, sales growth is expected to be
solid. We believe the improving volume trends in North America
and strong performance of its Pringles business will once again
drive the top line in the quarter. Kellogg acquired
The Procter & Gamble Company
) snack unit in Jun 2012 which included the iconic potato snack
brand, Pringles, for $2.7 billion. Pringles is now the
second-largest brand at Kellogg.
However, the company expects adjusted operating profit to
decline slightly year over year due to higher costs of input and
other cost increases. Earnings per share are also expected to be
down in the first quarter due to difficult year-ago comparisons
(which included a $0.05 benefit from interest rate hedges) and
headwinds from the Venezuela currency devaluation.
Our proven model does not conclusively show that Kellogg is
likely to beat earnings this quarter. That is because a stock
needs to have both a positive Earnings ESP (Read:
Zacks Earnings ESP: A Better Method
) and a Zacks Rank of #1, 2 or 3 for this to happen. That is not
the case here, as you will see below.
Negative Zacks ESP:
The Earnings ESP is -0.97%.
Zacks #2 Rank (Buy):
Kellogg carries a Zacks Rank#2 (Buy). However the Zacks #2
Rank when combined with a negative ESP makes surprise prediction
difficult. We caution against stocks with Zacks #4 and #5 Ranks
(Sell rated stocks) going into the earnings announcement.
Other Stocks to Consider
Here are some other food companies you may want to consider,
as our model shows they have the right combination of elements to
post an earnings beat this quarter:
FLOWERS FOODS (FLO): Free Stock Analysis
J&J SNACK FOODS (JJSF): Free Stock Analysis
KELLOGG CO (K): Free Stock Analysis Report
PROCTER & GAMBL (PG): Free Stock Analysis
To read this article on Zacks.com click here.
Flower Foods Inc.
), with Earnings ESP of +14.63% and a Zacks Rank #1 (Strong
J&J Snack Foods Corp
), with Earnings ESP of +9.84% and a Zacks Rank #2 (Buy)